Canada publishes inflation figures for January today. ING economists analyze CAD outlook ahead of data.
USD/CAD may find a little more support in the coming weeks
The expected slowdown in the disinflation process is in line with developments in the US and other major countries, and is not too worrying for the Bank of Canada, which estimates headline inflation of 3.2% in the first quarter of the year. However, labor market tightness and the postponement of the Fed's first rate cut mean the Bank of Canada is likely to opt for patience rather than more dovish guidance in its upcoming statements. That is unless today's CPI figures surprise noticeably on the downside.
USD/CAD may find a little more support in the coming weeks as we see the USD remaining strong and risk sentiment fragile. A return to last week's highs of 1.3585 seems appropriate for now. However, we still expect a decline in USD rates to unlock the pair's bearish potential in the second half of the year, even with the BoC cutting at the same time as the Fed.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
